Which brands are in best shape as ZEV mandate comes into effect?

The ZEV mandate, which dictates that 22% of each car maker’s sales in the UK must be electric cars, has now finally come into effect – and some are in far better shape than others. 

Data from Automotive Services International (ASI) on 2023 new-car registrations to the end of October revealed that you can count on one hand the traditional makers that are already over the threshold of compliance.

Every car sold above the 22% will attract a £15,000 fine, unless a car maker defers the sales to a future year. Complying can mean buying credits from other car makers with credits in hand – Tesla, Polestar and MG.

In the third quarter of 2023, Mercedes-Benz and the BMW Group both broke through the 22% share well ahead of schedule, with Mercedes pushing closer to 30%.

In the September plate-change month, Mercedes sold only 710 fewer EVs (5054) than petrol cars (5764), whereas in the March plate-change month, the gap was more than 7000 (2514 EVs compared with 9844 petrols). 

The BMW Group’s numbers are following a similar trend, its Q3 share sitting above 25%, thanks to increasing numbers of electric BMWs being registered; and with new Mini EVs coming as well in 2024, expect the 22% target to pose no problem. 

The Volkswagen Group is edging its EV sales upwards, although not at a run rate that on the face of it shows an obvious way to 22%, currently sitting at 15%. 

In the bumper month of September, the 3747 EVs registered by Volkswagen itself was 17% of its total sales, but in October that slipped back again to 11%.

The opposite occurred at Audi, where 18% of EV sales in September increased to 21% in October.

While premium brands are making greater headway towards the 22% target (Volvo was another running well in October, at 29%), ASI’s numbers show how hard it is for mainstream brands to convince mainstream buyers to go electric during the cost of living crisis.

With this in mind, the other Volkswagen Group brands need Audi’s EVs to perform, as the proportion of EVs sold reduces as you look down the brand hierarchy. 

Stellantis lacks a premium brand with the cachet of Audi, BMW or Mercedes, yet even with a number of EVs across its brands, it saw its proportion of EV sales in Q3 drop below 10% from above 15% in the quarter before. 

Yet this could be a case of smoke and mirrors. Vauxhall registered just 378 EVs in October, the first month of the fourth quarter, which was comfortably its lowest of the year by some margin. Is it holding back EV registrations until 2024, when they will count towards the ZEV mandate? On this evidence, it would seem so, and similar trends at Peugeot (225 EVs in October, compared with 753 in April) and Citroën (117 in October, after 370 in April) gives this argument extra merit.

Stellantis is on record as saying it will comply in 2024 without paying fines or buying credits from elsewhere; it seems it’s going to give itself a nice head start in January. 

Similar seems to be occurring at Kia. In October, its EV sales total of 955 was the second lowest of the year (it sold 902 in February). In March and September (admittedly plate-change months), it was around triple that. It was closing in on 22% in September, with an 18% share of EV sales in the month. So we shouldn’t expect to read too much into Kia’s EV sales from Q4. 

There are brands that will obviously be deferring their 2024 ZEV mandate requirements to future years, including Toyota. Its first EV, the bZ4X, has bombed, selling just 14 examples in October, and even in the plate-change month of September, it was only 51.

Toyota has several EVs in the works, so it’s banking on their future success, along with likely a complicated formula of trading that can be done to take advantage of an otherwise low-CO2 fleet average for ICE cars to offset lower EV sales.

We will be looking at how this could work in practice – something that also involves trading with separate ZEV credits for vans – in an upcoming Autocar Business feature. 

Ford has confirmed that it will defer to future years, when the likes of the Explorer will finally hit the market and it will finally move away from being known as the Fiesta maker. The Mustang Mach-E sells okay compared with some EVs, but it still  takes only around 2-3% of Ford’s sales. 

Others that are likely to follow a similar deferral path in the mid-market are early EV pioneers Renault and Nissan, which presently don’t have the cars to support a 22% market share but will do soon enough, most notably in Renault’s case with the 5. Keep your eye on the low-cost Dacia Spring to help support the mothership, too. 

Land Rover has openly said it will buy credits, which is no surprise when it doesn’t yet have an EV on the market and is one of only two car brands – the other being its sibling, Jaguar – that still counts diesel as its most popular drivetrain. 

The 22% target may be the same for everyone, but as the ASI data shows, the circumstances are different for every car maker, and there’s no one fixed way to achieve that target.

If the business of designing, engineering and building cars wasn’t hard enough, the art of selling them in the UK perhaps now trumps them all for complexity.